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| **The South American Cocaine Trade:An "Industry" in Transition**June 1996
**Contents**
IntroductionImpact of Operations against the    Cali Drug MafiaImpact of Operations against    the Air BridgeExpanded Role of    "Spill-Over" Countries in the Drug TradeDecentralization of    Cocaine Production and TraffickingFinal Observations
**Introduction**

The heart of the international cocaine trade is located in the Andean region of SouthAmerica. Virtually all of the world's cocaine base, the intermediate product used tomanufacture cocaine hydrochloride (cocaine HCl), is produced in Peru, Bolivia, orColombia. Cocaine base production in Peru and Bolivia in 1995 represented about 90 percentof the world's cocaine base; the remaining 10 percent was produced in Colombia. OperationBREAKTHROUGH estimated worldwide cocaine production in 1995 at 715 metric tons.1

The major Colombian drug trafficking groups continue to produce most of the world'scocaine HCl. They import hundreds of tons of cocaine base from Peru and Bolivia, convertit into cocaine HCl at clandestine drug laboratories in Colombia, and export the illicitproduct to the United States and Europe. Independent Bolivian and Peruvian traffickinggroups, however, increasingly are producing cocaine HCl. 

The governments in the Andean region took unprecedented steps against the drug trade in1995. Notable counterdrug successes included the arrest or surrender of seven of the eighttop Cali drug mafia leaders and the successful execution of an assertive air interdictioncampaign against the traditional Peru-Colombia air bridge. These counterdrug initiativeshave accelerated the trend toward decentralization of the "Cali-centric" drugtrade and compelled traffickers to change the way they "do business" in SouthAmerica. 

**Impact of Operations against the Cali Drug Mafia**

The death of Jose Santacruz-Londono and the arrest or surrender of such majortraffickers as Victor Patino, Jose Castrillon Henao and Juan Carlos Ramirez Abadia (aka"Chupeta") have disrupted some Cali drug mafia drug trafficking operations. TheCali drug mafia per se, however, has not been dismantled in that Cali drug lord Helmer"Pacho" Herrera remains at large and the Rodriguez-Orejuela brothers continue tomanage aspects of their trafficking organizations from prison. 

DEA reporting suggests, however, that a new generation of relatively young North Coast,Northern Valle del Cauca, and Cali traffickers will attempt to exploit any "powervacuum" created by the arrests of the Cali drug lords. The Henao Montoya brothers,for example, appear to be seeking to increase their power and influence relative to theCali "old guard." One important result of this heightened competition betweenrival Colombian trafficking groups has been an increase in drug-related violence. 

The major drug trafficking organizations in Mexico also may be expected to exploit thesituation in Colombia in order to expand their business contacts with cocaine suppliers inPeru and Bolivia. 

**Impact of Operations against the Air Bridge**

Assertive air interdiction campaigns against the traditional air bridge by thegovernments of Peru and Colombia have forced traffickers in Peru to transport cocaine baseincreasingly via land and riverine routes to airstrips in Peru that are located near theBrazilian or Colombian borders. This smuggling strategy minimizes the time that drugpilots are put at risk in Peruvian Air Force (FAP) areas of operation.2

Detected drug flights from Peru to Colombia in 1995 decreased significantly compared to1994. Intelligence in 1995 indicated that this decline in drug flights resulted in a glutof cocaine base in Peru. This, in turn, led to a plunge in cocaine base prices in Peru.Reporting in early 1996, however, indicates that cocaine base prices in Peru are on therebound. Although the air bridge interdiction initiative is considered to be a counterdrugsuccess, this year-long campaign does not appear to have caused any measurable shortage ofcocaine base for processing in Colombia. 

**Expanded Role of "Spill-Over" Countries in the DrugTrade**

Aggressive drug law enforcement efforts in Colombia and Peru have forced traffickers torelocate some of their trafficking operations to Brazil, Ecuador, and Venezuela. Brazilhas become increasingly important as a major cocaine transit route. Limited reporting alsosuggests that cocaine HCl production has increased in Brazil. 

Venezuela remains a major transit country for cocaine HCl produced in Colombia.Venezuela also is an important conduit for essential chemicals and a financial center fordrug money laundering. Likewise, Ecuador is an important transit country for cocaine fromColombia. The countries of the Southern Cone (Argentina, Chile, Paraguay, and Uruguay) areranked as secondary transshipment regions for cocaine destined for the United States andEurope. 

**Decentralization of Cocaine Production and Trafficking**

The emergence of independent Bolivian, Peruvian, and Mexican trafficking organizationshighlights the trend toward decentralization of the "Cali-centric" cocainetrade. Increasing quantities of cocaine HCl are being produced by independent traffickinggroups in Bolivia and Peru. 

Cocaine HCl production in Bolivia has increased significantly in recent years. In 1995,61 percent of the cocaine seized in Bolivia was cocaine HCl, as opposed to cocaine base.In contrast, cocaine HCl comprised only 9 percent of the cocaine seized in Bolivia during1994. 

DEA reporting also indicates that independent Mexican, Peruvian, Brazilian, andBolivian trafficking organizations are increasing their activities in Bolivia. To date,however, these organizations have not demonstrated the capability to produce and transportmultiton quantities of cocaine HCl from South America on a regular basis. The Colombiandrug mafias continue to play an important role in cocaine production and distribution inBolivia. 

Recent intelligence and investigative reporting indicates that some independenttrafficking groups in Peru increasingly are producing cocaine HCl. These independentPeruvian organizations, however, continue to sell the majority of their cocaine base toColombian traffickers, who then process the cocaine base into cocaine HCl at clandestinedrug laboratories in Colombia. 

The trend toward decentralization of the cocaine trade, of course, is not limited toSouth America. Today, the major Mexican trafficking organizations are second only to theColombian drug mafias in terms of power, sophistication, and international scope ofoperations. Accordingly, Mexico's drug lords may be expected to exploit opportunities toexpand operations. 

Limited reporting suggests that certain Mexican trafficking organizations areattempting to bypass the Colombian drug mafias and deal directly with Bolivian andPeruvian cocaine HCl suppliers. While predictions of a fundamental "power shift"in the drug trade away from the Cali drug mafia and toward the "MexicanFederation" are premature, additional expansion of Mexican trafficker contracts withcocaine suppliers in Peru and Bolivia is anticipated. The major Colombian drug traffickingorganizations, however, are expected to remain dominant players in the internationalcocaine trade in the next five years. 

**Final Observations**

The decentralization of the traditional "Cali-centric" cocaine trade presentsinternational drug law enforcement authorities with new challenges. Traditionalenforcement strategies and intelligence collection programs designed to target the majorColombian "cartels" may not provide optimum results against a fragmented cocaine"industry" comprised of hundreds of smaller, but significant, Latin Americantrafficking organizations. The international drug law enforcement community must explorenew and innovative strategies to confront successfully the evolving cocaine trade into the21st Century. 

**Footnotes**

(Click on footnote number to return to document.)

1) OperationBREAKTHROUGH is a DEA scientific research project designed to estimate the amount ofcocaine produced in the Andean region by examining the yield and alkaloid content of cocacrops and the efficiency of clandestine laboratory operations.2) Drug pilotshave reasonable cause to avoid the traditional Peru-Colombia air bridge. In 1995, the FAPforced down or shot down 20 drug aircraft. Likewise, the Colombian Air Force strafed orforced down at least 15 drug aircraft. 

This report was prepared by the Latin America Unit of the StrategicIntelligence Section. For additional information, please contact the IntelligenceProduction Unit, Intelligence Division, DEA Headquarters, at (202) 307-8726. |
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